eva is risk-averse. currently she has $50,000 to invest. she

Project Description:

eva is risk-averse. currently she has $50,000 to invest. she faces the following choice: she can invest in the stock of a dotcom company, or she can invest in ibm stock. if she invests in the dot-com company, then with probability 0.5 she will lose $30,000, but with probability 0.5 she will gain $50,000. if she invests in ibm stock, then with probability 0.5 she will lose only $10,000, but with probability 0.5 she will gain only $30,000. can you tell which investment she will prefer to make?